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NAHB: February Residential Construction Holds Steady
Eye on Housing Blog / NAHB / March 19, 2014
As the unusually cold winter continued in many parts of the country, March builder confidence remained steady. The NAHB/Wells Fargo Housing Market Index came in at a level of 47, one point lower from February’s 46. Ongoing weather challenges and increasing concern among builders about supply chain issues have held builder confidence down in recent months.
Census reported housing construction starts were virtually unchanged from slightly upwardly revised January figures. Total housing starts were 907,000 on a seasonally-adjusted annual basis, nearly identical to 909,000 in January. Single-family starts were 583,000, up 2,000 from January.
Regionally, single-family starts remained well below 2013 totals in the Northeast and Midwest, while above last year’s in the South and West. The regional differences match the location of the worst below-average temperatures and above-average snow falls and support the explanation of a weather effect rather than a shift in the housing market.
The pace of multifamily starts came in at a 324,000 annualized rate in February, down 4,000 from January but above the one-year average of 313,000. Other multifamily market data indicate that this sector continues to have room to grow. According to Consumer Price Index data, real, inflation adjusted rents have increased 1.2% from last year. And three-month apartment absorption rates for for-sale and for-lease unit rates remain near post-recession highs.
Local conditions remain positive for housing across the country. The March NAHB/First American Leading Markets (LMI) Index remained unchanged in March at .87 from February, but the number of markets considered at or above their last normal periods increased from 58 to 59 from February to March and from 47 to 59 year over year. In addition, the number of markets doing better than the national market rose from 147 to 152 month over month.
The LMI measures proximity to a normal market by comparing the last 12 months of activity in three indicators (single-family permits, home prices and employment levels). The gradual, persistent increase in the number of markets improving is further indication of the slow but steady process of resolving the economic and housing problems that developed during the Great Recession.